The NAM is pleased that the House Judiciary Committee on March 21 is slated to consider the Mobile Workforce State Income Tax Simplification Act (H.R. 1393) introduced by U.S. Reps. Mike Bishop (R-MI) and Hank Johnson (D-GA). The bill, which has been introduced in a several previous Congresses, clarifies and simplifies the ability of states to tax non-resident employees temporarily working in the state and eliminate a tax and compliance burden felt by job creators and their workers. From our perspective, this commonsense legislation is more urgent than ever.
Many manufacturers have employees who travel outside their home states as part of their job. Unfortunately, these out-of-state assignments sometimes result in an arbitrary and punitive compliance burden and tax liability for both employees and employers. In particular, employees are required to track and comply with various tax filing requirements while employers are required to maintain records and withhold state income taxes for these employees. This compliance burden is particularly onerous for small and medium-sized manufacturers that do not have in-house tax departments.
H.R. 1393 would clarify that a state cannot assess state income taxes on a nonresident employee temporarily working in the state for 30 days or less in a calendar year. Conversely, states could legitimately tax nonresident employees working more than 30 days a year in the state.
We urge all members of Congress to support quick action on this important tax simplification legislation. Clarifying the ability of states to tax mobile workforces will free up resources for employers to use in their business and leave more money in the paychecks of their employees.